The
New York Times reported that President Obama is considering
the swap of the preferred stock in banks the government now holds for
shares of common stock. Under the original TARP plan, the government
wasn't even supposed to take any stock at all. However, congressional
Democrats forced through provisions for acquiring stock in troubled
banks to guarantee the taxpayers “got something” for bailing out
the banks. There were those who warned Congress to include provisions
in the TARP legislation stipulating TARP funds be secured by
preferred stock only. That way, if an institution receiving TARP
funds still failed, the American taxpayers' “investment” would be
protected as much as possible. As senior debt holders, the taxpayers
would get first in line privilege for any repayments through
bankruptcy. Such language never made it into the final bill. The
crisis was too great to delay action on TARP during the
sky-is-falling rush to pass the bailout bill. Besides, no one would
take common stock over interest-paying preferred stock. Doing so would place them in
the position of junior debt holders, and at the back of the payout
line.
So,
why would Obama violate his fiduciary responsibility to the
taxpayers? Because for Obama, it is not about the money. It never
was. It is about control. Preferred stock may have more value, but
common stock has voting privilege. As holder of the largest block of
voting shares, Barack Obama can direct how the businesses are run.
Barack Obama gets to say who sits on the boards of directors, and who
are the CEOs. Barack Obama can dictate what types of loans are made,
at what interest rates, and set required qualifications.
That
Obama admitted he was considering this open power grab for control of
the financial institutions, was quickly decried by conservatives as
proof that Obama is really a socialist and Marxist. They are
incorrect in their assessment. Obama understands he doesn't need to
completely nationalize industries like Venezuela's Hugo Chavez, or
even “socialize” them as Maxine Waters threatened oil executives.
He only needs to own a big enough chunk to drive an industry in the
direction he wants it to go. Or more simply, Obama is an economic
fascist.
The
economic philosophy of fascism is most accurately described by
Sheldon
Richmond at Library of Economics and Liberty as “socialism
with a capitalist veneer.” As Richmond explains: